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Value creation and CSR

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  • Thomas Donaldson

    (University of Pennsylvania)

Abstract

A more robust, inclusive model of value creation will sharpen dominant normative theories of Corporate Social Responsibility (CSR) such as stakeholder theory and the theory of communicative/deliberative democracy. When measuring value creation, CSR theories oscillate between traditional, exchange-based approaches utilizing narrow financial metrics and value-oriented approaches embedded in prominent CSR theories. The two are often in conflict. The problem is aggravated by CSR’s assumption that all firms, regardless of industry, possess the same generic responsibilities. A mining company, a sports betting service, and a medical device manufacturer are on all fours when measuring CSR success. The paper identifies a contradiction between settled normative convictions and the corporate decision making that normative CSR theories prescribe. Using the pharmaceutical industry as an example, it references the widespread conviction that during the 2019 Covid-19 pandemic some pharmaceutical companies had a responsibility to reach beyond the goal of financial optimization. It then explains why this conviction cannot be rationalized using two prominent normative theories of CSR, namely, stakeholder theory and the theory of communicative/deliberative democracy. The problem hinges on a defective model of value creation. One implication of the analysis is that healthcare companies should readjust corporate governance in order to make health a focal goal alongside that of profit. At the same time, a semiconductor firm might satisfy its CSR responsibilities by only designating profit as its focal goal. The thrust of the paper is to show why reconceiving the model of value creation can advance not only stakeholder and communicative/deliberative democracy theories, but all CSR.

Suggested Citation

  • Thomas Donaldson, 2023. "Value creation and CSR," Journal of Business Economics, Springer, vol. 93(6), pages 1255-1275, August.
    • Handle: RePEc:spr:jbecon:v:93:y:2023:i:6:d:10.1007_s11573-022-01131-7
    DOI: 10.1007/s11573-022-01131-7
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    More about this item

    Keywords

    Corporate social responsibility; Value creation; Intrinsic values; Corporate ethics; Stakeholder theory; Deliberative democracy; Communicative action;
    All these keywords.

    JEL classification:

    • A13 - General Economics and Teaching - - General Economics - - - Relation of Economics to Social Values
    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility
    • P12 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Capitalist Enterprises
    • Z10 - Other Special Topics - - Cultural Economics - - - General

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